Thursday, December 16. 2010Seven Year Syndrome?John Linton There are not many days to go until 2010 becomes 2011 and this is a time when it becomes necessary to review, in line by line detail, the almost past 12 months in terms of what you may or may not have achieved and how you performed against the targets you set for yourself before the year started. In my case I do this as a 'final' testing measure that is 'run over' the revised business plan we are putting in place for the coming year. I have found that very difficult to do over the past week as we had to change our 2010 calendar year plan so many times over the past 12 months to meet what were, at least to me, a bewildering array of movements in almost every market in which we operated. Perhaps it's "seven year syndrome" - roughly the time when the very last of the original premises, and the enthusiasm and direction they brought with them, have 'morphed' into something different over time so that the original 'directions' have become blurred in to something else over time and have become something not as well understood - and perhaps not as appealing to those people within the company who really liked those aspirations. Whatever the situation may be if anyone was capable of seeing it clearly and then seeing what needs to be done about it - that person isn't me. What I do recognise is that the conditions in the market places in which Exetel operates are so different to the conditions that existed in December 2003 when Steve, Annette and I decided to 'create' the current version of Exetel we might as well be living on a different planet. This has become ever more clear as we reach the end of the planning processes for 2011 and try to come to grips with some of the extremely hard decisions we now have to make. We have begun to 'end' relationships with some of even the longest term suppliers we have had dating back to the first few months of 2004. This is something that I wouldn't have thought would ever happen. However it does under line the changes that happen in business over time and, in business, seven years is a very long time. Sad in many ways if you are deeply involved in those relationships but probably of not much concern to anyone that isn't. I am not sure how I feel about it (other than obviously differently in each individual situation). Probably there are varying intensities of 'sadness' but, other than the fact that the suppliers concerned will see their Exetel income stream diminish I doubt whether that view is reciprocal. Which probably sums up the need for change - we have taken a very different approach to our relationships with suppliers than they have to us and we have, almost certainly, been very wrong in our attitudes towards our suppliers. Personally I was sorry to 'say goodbye' to our Vodafone mobile supplier after over six years of doing business with them but, over time they had treated us quite badly and in making a change to Optus we saw an immediate mobile sale increase. Similarly we almost ended our relationship with Verizon until, past the last minute, they did what they always should have done without the unnecessary time delays and theatricals - but that is only a temporary 'stay of execution' and the end is in sight to that relationship. I even had to write formally to Telstra Wholesale (our foundation provider and the reason that Exetel entered this phase of its life) advising them that there was no future in continuing a relationship with them and that because of Telstra's overall 'go to market' policies over the past two years we would not be pursuing any further relationship with them. So Exetel will reach seven years of existence in this 'phase' of our corporate life in 15 days time and we will accelerate the changes of what we set out to be to something quite different over the coming months. It is of course not as 'clean cut' as that because that would be impossible in practically any sized business. However we will begin to move away from most of the things we have deemed to be an essential reason for being in business to become far more conventional in our aspirations and methods of operation....which will make it easier for the business to operate and therefore will put far less strain on people within the company who have had to work far too hard for far too long. Sad in many ways - but long over due. Copyright © Exetel Pty Ltd 2010 Wednesday, December 15. 2010At Some Point Prices Of Products.....John Linton ........reach a point where they can only rise: ...even if they've been continually falling for almost thirty years based on ever more amazing technology developments. I wonder if this apparent change in pricing of one of the world's 'base' products serves as anything other than a comment on some sort of 'bottoming' caused by the freneticism of what was once termed, quite wrongly, the GFC? Perhaps that's all it is - manufacturers continually discounting in the USA (and perhaps other countries) as demand for their products fell and then, approaching Christmas 2009 realising they couldn't sustain that and started raising prices again and switching their emphasis to making, relatively, higher spec boxes. The Australian residential ADSL industry is not remotely similar to the worldwide PC industry but the business scenarios are almost identical. The main similarity is that suppliers of ADSL in Australia have gone through a long period (well long comparatively to the total time of the product life) and have now faced two orso years of rapidly declining prices per service and a 'sea change' in that the largest provider has gone from being very, very expensive to almost the lowest cost to the bundling customer. Also continual growth which was a given for the first 7+ years has now become either a no growth or slow decline. The key question for us, is how much longer Telstra Retail will continue with its market share "win back" offers. As far as I can tell, from our daily statistics there has been no reduction in those efforts and, perhaps, even signs of some sort of intensification lately. I think the introduction of the 'fake' PSTN line charge of $30.00 by TPG signals the end of that company's ability to continue its 'toe to toe' efforts to combat Telstra Retail and shows the beginning of a 'mortgage the future' approach to external pressures (marketplace and shareholder promise). None of the current 'promotional' ADSL offers make much sense to me but that is more the sign of a tired/deteriorating mind than a sensible analysis. So, I don't know what to make of the article I cited. It presumably means something and, to a cleverer person than I am, it may well be useful input to looking at 2011. It seems to fit the pattern of Verizon's newish CEO's recent decisions, particularly his commitment to LTE investment, and similar interesting decisions by other communications companies in the USA (particularly) and in Germany and France (to a lesser extent). However I only use such information on a 'straws in the wind basis' when trying to see where the overall direction of where our very small company should be heading rather than have any relevance to today's product/marketplace decisions. Whatever anything may mean we now have only three days to complete the changes required to our 2011 business plan and we made very little progress yesterday. My 'right hand young woman' goes on leave at the end of this week so we need to have a very good understanding of what we are going to do with residential ADSL before she leaves. Most of the rest of the plan is pretty much in place in overall terms but it is now obvious that we will have to do the final version in the first half of January.....something I always regard as personal failure. Yet another sign...... Copyright © Exetel Pty Ltd 2010 Tuesday, December 14. 2010“If I’d Asked People What They Wanted They’d Have Said Faster Horses”John Linton ......attributed to Henry Ford when asked had he considered asking current users what they wanted for their future transport needs. I am irresistibly reminded of that almost forgotten, by me, quote when I was reading Stupid Stephen's latest comments on the benefit's of tax payer's funding a 'nation wide' fibre network. I think it would be fair to say that we only have Ms Faustus as prime minister because the 2010 equivalent of the people Henry Ford apparently commented on voted for an NBN and therefore Labor and two pig ignorant dummies in mid/Northern NSW also sold their souls based on their stupid decisions to back that woman for the same reason. So pig ignorance, a common characteristic of universal suffrage and a voting age of 18, has consigned Australia to spending money it doesn't have on the 21st century's version of "faster horses". (It's ironic that this folly was only made possible by a couple of hayseed MPs whose electorates have more horses than most other places in Australia). I was only reminded of this because I re-read the draft information provided by NBNCo regarding the conditions of signing up to use the new service and the issues, yet to be decided, regarding the eventual number of POIs that could be connected to. Now, I am no genius when it comes to understanding viable network topologies but I am sort of getting the impression, and please correct me if I'm wrong, that if there were a very few POI's (basically in the State capital cities) then a lot more companies could afford to connect to the 'NBN2' than if there were 200 or so POIs - the vast majority of the additional POIs requiring the company to put in place its own back haul from places like Alice Springs, Broken Hill, Mt Isa etc. Now again, correct me if I'm wrong, but isn't it only Telstra that has those sort of back hauls in place? What is it I'm missing in this scenario? Not that I care one way or the other - if I'm still alive when this network is finally commissioned it seems to me that just connecting to the capital city POIs gives access to 90% of the market for fibre services anyway - doesn't it? An unfortunate side effect of universal suffrage which also have an amazingly low age entitlement is that the populations of such States are ruled based on the opinions of the stupid. As a very bright person - James Rogers - once wrote: “It’s a basic fact of life that many things ‘everybody knows’ turn out to be wrong.” Certainly Ms Faustus and co continue to parrot the nonsense that no analysis of the 'NBN2' is required because "everybody know it is going to be amazingly beneficial and essential". I suppose it's the Christmas Season that is producing a dearth of real news and therefore more space/time for the silliness to be reported - hence the "silly season". However it's very hard to find anything of interest in the usually reliable sources I read each day; now the Arsenal/ManU game has started it is even harder to try and find anything of interest so I gave up trying. After 27 minutes the game is as bereft of interest as today's on line media was. So we will spend the majority of another day puzzling over how/if we can offer suitable residential ADSL services and then trying to find a real reason why we should do that. So far there appears to be no real reason to offer residential services to new users when, at least at first sight, there are companies that offer lower cost services and that is the major reason that differentiates selection of supplier when making a decision. The work on the other services is progressing more positively with a lot of new ideas and a lot of progress in sourcing new 'pricing' and new additions to the service offerings. In some ways the business and corporate communications services markets are reminiscent of the residential ADSL markets of 2002 in that the majority of users are paying ludicrously high prices for not very much speed or content and only conservatism of view point needs to be overcome. Of course these marketplaces are changing but they are still constrained by the supplier's needs to maintain very, very high end user pricing to pay for the immensely expensive overheads that 500% plus mark ups over two decades have allowed them to believe are necessary. It is a major issue to try and assess how fast some of these companies (Telstra, Maquarie Telecom, Optus etc) can, or are willing, to change. A goal to Park just before half time has, deservedly, punished Arsenal for a pretty pathetic display and in the stupidest of manners - oh well - it seems to always be the same in this fixture. Copyright © Exetel Pty Ltd 2010
Monday, December 13. 2010Business Plan Asumptions Are Critical........John Linton .....to any business plan's value....a pretty obvious aspect of planning. I referenced an article a day or so ago that quoted some ACMA statistics on the increasing decline in residences that had a wire line telephone service and the surging use of mobile data services. Now, I'm not going through the 'arguments' I have made and referenced over the past three years about how and why mobile data services will seriously erode the ADSL or fibre usage - get over it - anyone who insisted that ADSL was impervious to that erosion were, and are, just plain wrong. The follow on "fact" is that the trend will continue and the fact that follows that fact is that any 'business plan' that's based on "100% take up of fibre to the home" is more obviously ridiculous now than it was when that statement was initially made. I read this earlier this morning: and was surprised at the rapidly increasing take up of Android. When Exetel commissioned a MoIP development, Symbian dominated the market and we didn't think it worthwhile to pursue an Android development. If these statistics are true then we had better do that. Even if the figures are not accurate they confirm the ongoing trend reported by ACMA of more and more people using data on mobile devices. Of course, this usage is not any indication on its own of anything other than the march of technology. But, taken with the increasing number of homes that have no telephone line it would be foolish to think that those home's residents haven't also decided to use wireless broadband for their mainstream internet connections. What should be more concerning, if you were basing your decision to build a fibre network, is the age demographics of the residents of these telephoneless residences - under 35. These people would be normally expected to conform to the "massive downloader/games player latency freak/on line movie watching categories. If they are, then 5 or so gbs and latencies around 80 milliseconds are, apparently, more than sufficient for their internet use today. It would also be a concern that people who haven't developed an addiction for on line games and the theft of other people's property in their late teens, 20's and early thirties are less likely to ever go down that path once they are over 35. With the rapidly increasing use of VoIP to make telephone calls the need for a telephone line is obviously decreasing. With the ongoing reduction in wireless data services the need for a telephone line for an ADSL service is similarly decreasing. For the people who insist that ADSL type services are essential for massive down loads the fact remains that even including the massive down loaders the average down load on the services Exetel provide is less than 15 gb per person per month.........over 90% of users down load less than 10 gb per month. While I very much doubt our figures are indicative of anything very significant they are, yet another, indication of the trends in current internet use - more wireless and more VoIP resulting in less ADSL and less PSTN telephone calls - they are very real, and very obvious, trends. Of course, it is not sensible to read to much in to trends in your own business - obviously such trends are heavily influenced by your own actions which may well have no relevance to the general market places in which you operate. Whatever view any individual might want to take it would be very unwise to dismiss trends that don't suit your personal agendas. Copyright © Exetel Pty Ltd 2010 Sunday, December 12. 2010Raising Prices......John Linton ....possibly the hardest 'task' in commercial life. However I read this earlier today and, assuming it was accurately reported, pondered on what it means: We started the very difficult task of changing the prices at which we supply residential services last night by advising our customers who use our bundled wire line and telephone call services that the call charges will be increased from 1st January 2011. The new pricing is still lower than the call charges made by all/most other telephone call providers for wire line services but, we well know, that any price increase of anything is always unwelcome. However we have kept our call prices the same for over four years and many things have changed since 2007. We had hoped to introduce a new $60.00 plan that includes unlimited local, national and Optus CTM at the same time but although we have agreed to the terms for this service, Optus are unable to "put it in to their system" until some time early next year. We need to change the way we offer ADSL to move all plans to being bundled with the telephone line and call charges over the coming months which means no longer offering 'naked' ADSL and, almost certainly, not offering a 'BYO Line' service in the future. It is strange, at least to me, that so much has changed over the past two years that the 'naked' concept has been effectively killed off by the weird pricing that is involved in delivering it. For us (and it may well be that we are appallingly bad negotiators) there is a $2.00 difference between an ADSL service that includes a functioning telephone line and a service that has the telephone line crippled. By the time you add on the support and unhappiness costs they are pretty much the same price....except the 'naked service has less functionality and moving to or from ISPs is a pita. So where's the benefit to either seller or buyer? There isn't any benefit at all; just some pointless difficulties. In fact, now that the carriers are offering included telephone call types within the price of the line it is more expensive to offer a naked service than it is to offer a full PSTN line service. So.....EXetel needs to offer its 'naked' ADSL customers an attractive and painless 'upgrade' path back to a full service line which we think we can achieve at $60.00 per month for a lot of down loads and a fair chunk of telephone calls at no charge. Of course if a person makes absolutely no telephone calls (hard to see but possible I imagine) then this won't be of any day to day benefit to them but at least should they wish to transfer to another ISP they will find it much easier. For the people who only use their mobile to make telephone calls or use VoIP 'free' is still a saving over ten cents per call or whatever the mobile call is charged at. So we will have to find very persuasive words to 'consolidate' our ADSL offerings from the current range of mostly money losing plans to plans that make some small amount of money. I don't know whether $60.00 a month including line rental is the way to go but it seems to be the logical 'number' at this time of the ADSL residential marketplace 'cycle'. The concept of $10.00 discounts from your monthly plan cost if you also buy an Exetel mobile service seems to becoming more popular and we are seeing how that can be extended to wireless plans of some type. Telstra Retail have taught us a very painful lesson, we are obviously very slow learners, that in these difficult days it is essential to 'bundle' as many services as possible to be able to meet the ever lower individual costs demanded by residential users. Our old assumptions have been wrong for a long time now and have to change. Whether we can bring this about is problematical. How many customers we may lose in asking them to pay for a service that doesn't result in a loss to Exetel remains to be seen. It really doesn't matter - we can't continue providing services to residential users at a loss. Even multi billion dollar companies find it difficult to balance costs with the obligations to deliver services: It's much easier to make decisions when you have no choice. Copyright © Exetel Pty Ltd 2010 Saturday, December 11. 2010A Good Christmas Party......John Linton ......that seemed to be enjoyed by everyone. One of the advantages of being part of a small company is that even with your Christmas party lasting only two and a half hours you get to speak to practically everyone and everyone gets to speak to everyone else they wish to. For the sixth year in our seven Christmas Party existence we have hired the same room at Star City and have followed the same 'routine'. Bus from the office/drinks ready to be poured on arrival/food offered by waiters bearing trays soon thereafter/Christmas presents of casino chips handed to each person by Annette/short speech (<5 minutes)/Caricaturist/Tarot Reader/Close Up Magician 'touring' the room/copious and high quality finger food/more than adequate amounts of high grade alcohol. 8.30 people leave with most going to the casino floor to use their Christmas chips to play the tables with their co-workers or party on in one of the several bars in the casino or nearby. Annette and I enjoyed ourselves and I am pretty sure, judging by the increasing noise levels and continually increasing gales of laughter (generated by the many caricatures drawn, the still amazing 'magic' tricks' and, of course, the rivers of alcohol) and the smiling faces everywhere that every body else did too. I then played craps for around half an hour - almost all of that time I was the shooter rolling 29 consecutive 'numbers' (remarkably not a single 2,3 or 12 ) and during which period I trebled my starting stake and left when I finally rolled a seven to much back slapping and 'onyas' at both ends of the table - apart from the sour faced woman who continually bet against me and seemed to lose the best part of $5,000 in that short space of time. Annette had drunk very little so we were able to drive home and even the traffic seemed to be sparser than usual for the time of year on a Friday night.....a highly enjoyable night. Sales were remarkably good, across almost all product/service types yesterday which is unusual for this day in December but I doubt that it means anything other than a discrepancy between this day this year compared to other years due to other events completely beyond our ability to know. We will attempt to complete the first draft of the 2011 business plan by the end of next week but based on what I see now we will need today some very serious work on it over the remainder of the month. It seems inevitable that the drastic changes to the ways we offer residential services will have to be made and that will be a daunting and 'dangerous' task. Unfortunately it will almost certainly have to be done when the personnel resources are going to be at their scarcest which is something I am not looking forward to. Our lawyers commenced the formal proceedings against the TIO yesterday with the first directions hearing at which, strangely, the TIO's counsel made a request for anonymity in terms of the perpetrators of the spurious complaints that are the basis for the action.The judge rejected that application,at least for the time being, as he couldn't understand why it was made any better than anyone else could. It seems this issue is going to take even longer than I had, pessimistically, expected it to. So only 14 days to Christmas with about 28 days of work to do. One day I must learn to plan my time usage much better. PS: And in the "I told you so" vein: my predictions starting three years ago continue to be supported by the ongoing statistics made available by the various federal departments that track trends in Australia - so to all the posters who said it would never happen and it was my own self serving personal fantasies - I told you so. Still think the premises on which the'NBN2' are being built are sound? Copyright © Exetel Pty Ltd 2010 Friday, December 10. 2010You Can Tell The Year Has Gone Faster......John Linton .......than ever before when the day of your work Christmas Party rolls around and you realise that another year has truly flashed by.....so tonight we hold the Exetel Christmas party. As we have for the past five years we have booked the usual room at the Casino and have hired a bus to make the journey from North Sydney a painless one. The 'entertainment' Annette has booked is a mixture of the old and new and the food 'package' is the 'premium' version that has always been very nice and more than enough - same with the beverages. The casino has always been a popular 'after event' venue as we give each person some gambling chips (amount depending on length of service) to go with the optimism that as much alcohol as possible crammed down your throat in the shortest possible time tends to induce. I think that one sign of how difficult the current year has been in the residential ADSL market is the, at least as yet, the complete absence of "Christmas Specials" - from Telstra Retail and every other provider. Maybe I have missed them in the blur of days passing ever more quickly but I did look over the past few days and I couldn't find any. Is this a sign of discount exhaustion by Telstra Retail et alia? Has "gaining market share" for Telstra Retail come at the enormous cost to profit that it appeared to be doing? Or am I like Larry of the old games simply "looking in all the wrong places"? It will be interesting to see what now eventuates.Perhaps they are waiting to bring out New Year specials? In any event it is, in my opinion based on no knowledge of any other company's abilities and costs, going to be very, very difficult to operate at the current price points for very much longer for all but the 'wealthiest' of companies. We continue to make some progress towards completing the 2011 operating plan and have basically done all of the hardest work. With a bit of luck we will complete the other work over the coming week and will then be able to do the documentation for individual personnel in the remaining week before Christmas. This will allow us to then do the really hard and very, very complex work involved with tidying up the current 'old' ADSL plans that have grown to be far too many as we have tried to maintain our customer base in the ever more difficult conditions presented by Telstra Retail and, to a lesser extent, by TPG. This has become necessary as, although the past year has "flashed by", it will have "flashed by" because we have never worked so hard for so little 'reward' - and when the reward you are working for is as low as Exetel's targets are that is something you simply don't want to repeat for a third year. Apart from any other reason, there is very little energy of mind or body left to allocate to such mind numbing levels of exertions. It will be interesting to see what the new year brings in these interesting times......I think it will be very much a case of adhering to the old adage of "hope for the best but plan for the worst". It seems likely that there is, possibly, some way to go in the discount ADSL markets for Telstra and there are more and more signs of the same happening in the small/medium markets - at least the ones that Exetel addresses. Whether the same is going to happen in the larger sized corporate markets remains to be investigated. Time for new strategies and new directions - there is no sinew, let alone meat, left on the old carcasses. Copyright © Exetel Pty Ltd 2010
Thursday, December 9. 2010Widening Opportunities Via Collaboration?John Linton We had an interesting approach yesterday. Airtel, the giant Indian mobile company (larger than Telstra, Optus and Vodafone Australia combined), sent us an RFQ to provide customer sales, support and other associated services for their mobile company in Sri Lanka. This is the second approach of this type in the last week although this is a very large requirement from a very large company. While it is, possibly, too large an opportunity for us to be a front runner for at this stage it is an indication of how far the Sri Lankan company has developed since we began operations there and the reputation for excellence that it has in the Sri Lankan business community; local and ex-pat. The only objective we had in setting up the company in Sri Lanka was to be able to offer the very best support and other services to our customers and, without going over board, the progress made over coming up to five years from the very modest start made all those years ago is very satisfactory. It is possible to believe that the SL company will exceed world's best practice in every aspect of its operations in the foreseeable future. We continue to work with two other Australian companies on much, much smaller versions of providing 'back office' support for their operations though, understandably, there are significantly different issues to be overcome relating to 'confidentiality' and 'data protection' type issues with Telstra Retail's long reputation of such dealings casting a long shadow over that sort of collaboration. However, subject to some more serious discussions these discussions may result in positive outcomes. We supply ADSL plans to a few, very small, VISPS and, depending on how these other current discussions work out, may extend those services to back office support as an add on service. It's a concept we have considered from time to time over the past 18 months or so but have always concluded, very sensibly, that it's a 'future thing'. We have got a little closer to making one of the 'joint venture' opportunities we have been discussing a reality with the basics of the, very different from where we started, arrangements pretty much agreed....virtually a standard VISP agreement...and if we/they can produce some acceptable paper work by the end of this week that may start, in a minor way, as early as next Monday. We have based a part of our business on collaborations from day one - though the initial collaboration ended in a total disaster - the collaborations with our agents has been very successful and mutually beneficial with more than a few of our original agents still with us. We will try and build on this program more significantly over the coming months. So, as we get a little closer to finalising our plans for the coming year, 'collaborations' of various types are beginning to figure more prominently than when we began the process some 5 weeks ago. How the new year will develop is something well beyond my comprehension and I won't begin to make predictions on whether the current heavy discounting will continue - but I wouldn't bet against it. All that means though is that Exetel has to continue to move away from dependence on markets and services that are unprofitable for us. I did have a couple of other points but the power is about to be switched off (in my home) to allow for some maintenance to something or other so they will have to keep for another day. Copyright © Exetel Pty Ltd 2010 Wednesday, December 8. 2010When A Politician Uses The Words "Holy Grail"....John Linton .......you can be certain that whatever is being referred to is anything but. Firstly, for all the people who objected to my assessment of the late and totally unlamented previous "prime minister" as an egotistical, posturing, moon faced, grinning clown who hadn't got a clue about any aspect of sensible decision making - my assessment was totally in line with that of people whose job is to make such assessments: http://www.smh.com.au/technology/technology-news/us-condemns-rudd-20101207-18obr.html I told you so. Not that it should come as any surprise to anyone that Krudd was so badly regarded - time and time again he looked like a total fool when making his many idiotic pronouncements. Despite what some people thought at the time many, many people who came in contact with Krudd formed the same opinion as I did: Perhaps it's only me that thinks that it's unusual that our country's head of DFAT should be regarded in this way by, at least, our major ally. Talking about total fools - Stupid Stephen was always a keen competitor for Krudd's title as the holder of the Rex Connor Memorial Trophy as the most clueless person ever to have held a cabinet position in an Australian Government. His current new claim to that position is his trumpeting of "The separation of Telstra is the holy grail of infrastructure reform". If ever a man self proclaims his lack of knowledge and stupidity that silly posturing phrase is surely a contender: I don't hold Ovum in any particular regard but they, generally as far as I have seen in the past get their research right in the articles I have read. (I suppose that should be a given considering their raison d'etre but it isn't always the case - particularly with the current and previous Labor 'governments'). However the glaringly obvious point is that the provision of ADSL (and other) services in Australia did see a drop in Telstra's market share from 100% in 2002 to less than 50% in 2009 with all of the top ten providers of those services making acceptable commercial profits - at least from those that were on the public record. The same applied to mobile, telephone charges and, especially, VoIP which Telstra doesn't officially offer but almost certainly uses within its own infrastructure. While Professor Fred Hilmer made several cogent points about the need to structurally separate Telstra back in the very early 1990's it was only one scenario and it made very then, and remains making now, very little difference to the effectiveness of how communications services are delivered around Australia. Today, approaching two decades after the passing of the Australian Telecommunications Act everything any sensible person could hope for in promoting competition in the telecommunications industry has come to pass. There are two competing mobile networks that have in excess of 50% of the market. There are several broadband networks that, between them, have more than 50% of the ADSL2 market and telephone calls are as cheap as anywhere in the world for anyone who bothers to look at the choices available to them...... .......and the most important aspect of all....Telstra now sells telecommunications services at prices that are lower than all/almost all of its competitors thereby demonstrating that competition in telecommunications is very much alive and well in Australia. In fact it's so alive and well that Telstra, based on it's current pricing, is recovering some of the market share it has lost over the past almost 20 years. If the definition of success of 'de-regulation' is that end users have greater choice and therefore lower prices then the "Holy Grail" of communications market deregulation was achieved in 1982 and all of Stupid Stephen's posturing is 20 years after the fact. But then.....that's what you get when you give your vote to those fools......a population always get's the government it deserves.....would anyone seriously take an 18 year old's advice on anything that involved something as important as deciding how a country should be run? Copyright © Exetel Pty Ltd 2010 Tuesday, December 7. 2010Exetel - An Awkward Sized CompanyJohn Linton Some progress was made yesterday towards putting in place arrangements to work with two other companies in quasi joint ventures. We also made some progress in completing next year's business plan but also realised that, small though it is, Exetel has grown beyond the, what I have always thought were, sensible bases of previous management practices that we have used for the first seven years of its existence. I feel like I am being nickel and dimed to death with minor issues when what is really happening is something quite different and it concerns me that I don't see issues in the same ways that so many, different, other people see them. As I have fleetingly noticed and commented on over the past two years - Exetel is inexorably changing and can't be managed in the ways I have become used to and happy with. In terms of the 'joint ventures' there isn't much 'joint about them'. At these early stages it will be Exetel that provides a very large dollop of its intellectual property and quite a bit of its software systems and in return we will get not very much. However the value of these possible agreements is in the future and that is always a quite dangerous view to take - at least from my past experiences and from what I have observed....although I do understand that there could very well be significant advantages if either of them do work out. Perhaps it's end of calendar year tiredness that is making me view things more cynically than usual but I am not feeling that anything I am involved in at the moment is worth the time it is taking to reach any sensible conclusion - and I do realise that's a state of mind rather than reality. What really continues to concern me each day is the ongoing 'marketing activities' of Telstra Retail. I don't know what else they may have in mind in terms of improving their current win back market share offers but there has to come a time when they make providing ADSL residential services so uneconomical for any other service provider that you have to, very seriously, consider what should be done. Over the last week or so there has been an apparent lessening in the churn aways to Telstra and a noticeable increase in the churns to Exetel from Telstra (and a more noticeable drop in churns to TPG and a corresponding increase in churns from TPG) - both have gone back to being positive in Exetel's favour. I am not stupid enough to think that a few days of more positive results mean anything very much and I have little doubt that this is only a very temporary respite. In the ongoing development of the 2011 calendar year business plan it is becoming clearer that we need to find a way of wasting so much resource involved in supporting Telstra ADSL services if we can't make a sensible financial return from them in the coming year - which looks highly unlikely. We made the decision on hiring a sales director yesterday and hopefully that will be completed by the end of this week - assuming the offer of employment is accepted after the paperwork is 'examined'. This position is now very important for Exetel as we continue to add more sales resources and personnel in to the company. If every thing goes to plan we will have more than 50% of our total personnel in sales positions by around the middle of 2011 and more than half of those resources will be devoted to business/corporate sales - mostly based in Australia but a growing number in Sri Lanka - depending on how things work out. There are an awful lot of things to get right before that can happen. If we do actually accomplish that then by the end of 2011 we will have over 60 people involved in selling to end customers and the company should be on the way to the planned goal of revenue from business users exceeding revenue from residential users. So one more day goes by and I have the distinct impression we didn't accomplish as much as we should have......as someone more insightful once said (attributed to John Lennon but I don't think that's correct) - "Life is what happens while you're busy making other plans".
Copyright © Exetel Pty Ltd 2010 Monday, December 6. 2010Careful And Detailed Planning.....John Linton .....doesn't always produce the results you expect and often require. I reviewed the business plan over the weekend, in between doing a number of other things unrelated to Exetel, and will try to make more progress over the coming week. However I think we have established a realistic and conservative revenue growth target for the coming six months together an even more modest profit target that, with careful management and a reasonable forecast of other companies activities, and a great deal of hard and imaginative work by every single person within the company should be deliverable. Mind you I always think that at this stage of the planning cycle and am not always correct. Subject to any last minute changes of mind by Steve or Annette we will proceed with the appointment of a sales director with the aim of him starting on the first working day of January. Who we will select for that position remains a tough call which I hope to resolve today after one final chat which I didn't manage to have last week due to an unexpected family issue with the person concerned. It has been a hard decision to make which is unusual in my experience - I usually make up my mind 'instantly' on personnel suitability - yet another sign of something or other. So the week will start off with a decision that will have a material impact on just how Exetel progresses in the early part of 2011 - scary responsibility. The basics of the plan for the next six months are now done with 'only' the detail remaining to be completed. There are now two working weeks for this to be put in place which, assuming we make some progress today and tomorrow should be enough time to not make too many errors. I would think that we will be able to get through that work without all that much trouble if we can actually concentrate on the different elements for sensible periods of time. There is one major issue that we have to address which we have shilly shallied about with for far too long. That is - what do we do about Telstra? With the Telstra Separation Bill now passed, I am assuming that something or other will now happen over some long term time frame. Unlike Ms Faustus and Stupid Stephen, I see no changes taking place that will benefit Exetel in any way and quite possibly make the already extremely difficult process of selling ADSL (1 or 2) services from Telstra becoming even more difficult. I am a heartbeat away from recommending to Exetel's directors that we cease selling Telstra ADSL completely and allow Telstra Retail's ongoing marketing campaigns to reduce that section of the customer base over time or encourage that section of the customer base to 'migrate' to Optus or AAPT based ADSL2 services. I am very frustrated at giving Telstra Wholesale $1.5 million a month that they use to mount marketing campaigns against us to take those same customers away from us. When you consider it this situation is ridiculous. When I am reminded that we have had $1 million of our personal money tied up as a "security deposit" for over five years for the privilege of selling services on behalf of Telstra so they can try and put us out of business it becomes sheer lunacy. I think more than a heart beat of time has passed but I haven't yet made that recommendation. There are a number of decisions of that magnitude that need to be made over the coming two weeks which will adequately fill in any time available to make them. Copyright © Exetel Pty Ltd 2010 Sunday, December 5. 2010What Has The TIO Accomplished?.......John Linton .....beyond spending $29 million a year of communications provider's scarce financial resources giving employment to otherwise unemployable people? Has the TIO made any positive contribution to any person or organisation at all? The answer is yes, of course....though that's very hard to quantify in any way at all let alone whether more progress could have been achieved by spending less money with more directional control and more effective planning. But, apart from day to day expenditure on what is effectively a 'moaning post' has it actually delivered any lasting benefits by its continual hiring of completely inappropriate personnel and a subsequent very high staff turnover constantly ensuring there is no knowledge or competence to deal with the situations with which they are confronted resulting in their meat axe approach to every situation. Now that Exetel has finally run out of patience, after over twenty four months of Exetel/TIO dealings and over the past year - twelve months of Extel lawyer/TIO lawyer dealings, with the deliberate delays in dealing with the specific examples of TIO incompetence and sheer stupidity in dealing with what their own organisation's constitution requires them to do we have had to ask our lawyers to file the required documents asking a judge to order the TIO's employees to obey the mandated processes their constitution states must be adhered to. In simple terms this means: 1) The TIO cannot take any action against the complained about company unless the company is actually the provider of the service to the complainant. 2) The TIO cannot take any action against the complained about company unless the complainant has first detailed the complaint to the complained about company and given that company a reasonable amount of time to rectify the matters complained about. 3) The TIO cannot take any action against the complained about company, other than to advise them of the complaint, unless the company being complained about has then been given the mandated time to remedy the complaint. In 80% of the 330 fines imposed by the TIO over a twelve month period (one of the lowest in the communications industry in both absolute numbers and percentage of total customers) one or all of these specific conditions of the TIO's constitution were clearly breached. This is ignoring the fact that the vast majority of the actual customer complaints were either totally fabricated lies or trivial beyond the ability of any even semi reasonable person to comprehend. I can have no idea if such a percentage is typical across the total number of complaints but I would have no reason to believe otherwise (I don't believe that Exetel is singled out for specific 'punishment'). If a court upholds this view then ANY organisation in ANY field of operation that operates at an 80% level of incorrectness is a rogue/criminal organisation that if it were operating in a commercial environment would be closed down by the authorities with the directors tried and jailed for perpetrating massive fraud via threats and coercion. Inappropriate words? I don't think so. However it is irrelevant what I think - it only matters what a judge decides. Does Exetel have any recommendations to improve the situation? Yes we have been submitting them for over three years. Has the TIO taken any notice of them? No That's why the only recourse to achieve any improvement is to ask a judge to do it. PS: Good to continue to be reassured by Whine Swan that all Australians are benefiting from Australia's booming economy: http://www.smh.com.au/national/going-for-broke-the-insolvency-story-in-australia-20101204-18kxd.html Copyright © Exetel Pty Ltd 2010 Saturday, December 4. 2010Roll On ChristmasJohn Linton It was an interesting week, I can't think of a better adjective. When the 1st of any month falls on a Wednesday it seems as though there is a 'general pause' in events generally....as if people take a 'mini break' from Wednesday to Friday to extend the upcoming weekend. I suppose school holidays play a part in this when it occurs in December as well as an increasing participation in the the various Christmas and end of year functions. So we finished November in a good way and started December very quietly - and I do realise it's only three days so far. However it may be a sign, along with the increasing stream of 'analysis' appearing in the financial press that all is not well in the economy down under. We didn't make a decision on renting additional space in our current building though we did get the layout done by the long term company that has done all of our fit outs since we started in business and they promised to have the costing done by the end of next week now we have approved the design. I guess our dithering hasn't cost us anything other than to 'save' an additional week's rent in the event that we do proceed. Frankly, although the agent tells us there are at least two very serious other potential buyers I am inclined to believe that the chance of a completion before the new year is looking less likely than it once was and maybe other people are like us - not quite certain of exactly what the new year will bring. I did the final interviews with the three remaining candidates for the Sales Director Position over the last five days. After thinking about it I eliminated one despite him having a very good, verifiable, track record. My conclusion was that Exetel and he would not be a fit with our ways of operating and that his future aspirations would only be met by a much larger and more 'corporate' employer. So we need to decide over the weekend whether or not to proceed with this appointment and, if so, which of the two possible people we will select. It is not an easy decision to make with both possibilities having compelling, but very different, capabilities and very different personalities and other characteristics. We made miniscule progress towards completing the next six month's business plan and, of course, that means that the time to complete this extremely important set of tasks has shrunk by a further 7 days. I don't quite know what to do about getting the plan completed on time and I think it's one further indication of just how difficult operating a small Australian communications company has become in these very 'challenging' times. Perhaps I too am suffering from lethargy engendered by early December syndrome. Exetel's law suit against the TIO drew some media and industry attention during the week. My personal email from people who work in the industry, most of whom I didn't know, ran 11 - 0 in favour of attempting to bring some order to the chaos that the TIO represents to any moderately sensible person who has any knowledge of how that organisation operates. The media that apparently got hold of the Exetel December Newsletter didn't really grasp what we had tried to explain in it - but then when is that ever not the case. I am quite satisfied that the documentation we have put together (largely based on the TIO's own emails) clearly demonstrates an organisation whose employees consider themselves to be a law unto themselves and flagrantly and self admittedly breach the TIO's constitution with the often repeated statement in writing that "we can do whatever we like". I will be interested to see what defence the TIO put to the court and even more interested in how a judge views hundreds of indisputable constitutional breaches by TIO junior, and often completely inexperienced, employees. There were two lighter moments in the week that I was made aware of when two different 'ex customers' attempted to sign up with Exetel again. I have made the observation before that I am completely bewildered as to why an ex customer of Exetel who, while he was a customer, heaped the most appalling abuse on every aspect of our service and the competence of the people he spoke to (using the most disgusting language) as well as making threats of physical violence as well as legal and other threats (and in one case having a payment history of multiple dishonours) would try to resign with us. I mean - what mental state must they exist in for this to happen? Nevertheless not once, but twice this week this has happened. One of the automated systems we put in place some years ago keeps a black list of telephone numbers where abuse of this type has emanated from and if the abuser tries to sign up again it sends an email briefly stating that the service is unable to be provisioned. If the number is detected as trying to sign up for a second time an email is sent saying the service can only be provisioned on the payment of a deposit of $500.00. So this happened twice this week with a new flood of disgustingly abusive and threatening phone calls. The insane call I liked best was conveyed to me by one of our politest corporate sales reps whose phone it was directed to. She told me that an important customer was on her line and demanded to speak to the CEO immediately. He told her he was calling from an office where there were several media reporters, his solicitors and the police and if the CEO didn't speak with him immediately he would sue xxxxxx xxx xxx for everything we owned. She was told to simply advise the person that the CEO was not available and then hang up the telephone. That particular lunatic also needs to change his script - we have a recording of a previous call he made when his service was terminated at the end of the contract that was worded virtually identically. Now we have two. At least it gave us a good laugh. Makes you wonder. Copyright © Exetel Pty Ltd 2010
Friday, December 3. 2010Unlimited ADSL AND Unlimited Telephone Calls For $60.00?John Linton Exetel has been using VoIP in its Australian operations for over four years now and in its Colombo offices ever since we set up the company there. As well as using VoIP we heavily use MoIP and only have one or two PSTN lines in both offices for 'testing purposes'. While there are now many other reasons that improve our operations that can't as easily be done on 'standard' telephone lines, the main reasons we use VoIP rather than PSTN/ISDN services is of course cost. I would imagine that the overwhelming majority of residential VOIP users only decide to use VoIP because of cost. So here's the thing - what happens if the majority of PSTN calls a residential user makes were 'free'? Both Telstra and Optus Retail have moved towards this type of offer and it is something that Exetel have been considering but have never been in a position to do. I was talking to one of the people who 'analyse' the, publicly listed telcos who, quite rightly, took the view that TPG's $60.00 unlimited ADSL plans for '$30.00' plus '$30.00' for the phone line were very effectively combating Telstra's wave after wave of "welcome home" offers but that their call charges were too high. I pointed out to him that anyone who thought the call charges were too high would use VoIP but agreed that the majority wouldn't do that so the profit from voice calls at those rates would make a healthy contribution. So is the 'challenge' for today's home communications provider to meet TPG's price point of $60.00 for unlimited downloads and 'trump' its very expensive telephone call charges by offering unlimited local, STD and calls to Optus mobiles? Given the apparent appearance of network under provisioning by TPG perhaps unlimited everything is going to become the offer de jour? It will be interesting to see what Telstra now does with wire line telephone calls and, to a lesser extent, how Optus reacts.....and in a very minor sense how companies like Exetel can 'react'. Another indication of falling results by 'service industries' is explained here: http://www.theage.com.au/business/services-sector-weakens-in-november-20101203-18ioj.html We have talked to both Telstra and Optus about how they/we can improve our residential ADSL offers in the new year but have not made much progress. However there may be ways we can adapt our various services in terms of bundling wire line based services with ADSL and unlimited telephone calls to be able to offer unlimited ADSL and unlimited voice calls and improve on TPG's current offer in terms of 'free' components which have no embedded 'sting in the tail'. If all local/STD/CTM Optus calls were free and the customer could use VoIP (if he she were capable of doing that) for CTM Telstra/Vodafone then why would anyone buy a TPG service? Ihave previously mentioned that "free" was the only offer that was better than "unlimited" in general terms in consumer marketing but I really have no basis for making that statement other than personal observation over the years (the number of times I have seen it used). It will be interesting to see in this increasingly VoIP world how standard telephone call charging changes? Perhaps rather than "free", all PSTN telephone calls will be charged at 10 cents per call/untimed? I don't know whether we would be able to make such an 'offer' work given the costs that the carriers would charge but it's a thought. Personally I doubt that "unlimited downloads" would appeal to the sort of person who would like unlimited calls so there would be some guess work (oops - I meant research/analysis) to be done particularly on the usage patterns of our current customers. But I really do think that 'free' is a better way to go than unlimited. Copyright © Exetel Pty Ltd 2010 Thursday, December 2. 2010Seen Through A Glass Darkly.....John Linton ....may have a 2,000 year old meanings much less trivial than I'm hijacking the phrase for but it seems to perfectly describe my limitations in understanding the current residential communications markets. No matter how hard I try I simply can't seem to understand what is going on - beyond the obvious consequences of a saturated market (at least for ADSL) and the dominant supplier (Telstra Retail) desperate to "win back" market share and with a frighteningly large 'marketing' budget to do that. So the head line phrase I used exactly describes my situation at the moment - I can dimly see various things but I can't make them out in enough detail to really understand what is truly going on. I appreciate that I am not the only person having difficulty grasping the details of the current situation - every time I talk with one of Exetel's suppliers I struggle to work out whether they have wonderful acting abilities or they cannot understand the current situations any better than I can. I base that view on the, seemingly, startlingly naive statements they make about their understanding of the current marketplaces and the actions of the various competitors within those marketplaces. Two press reports about Internode in the last few days exemplify what I mean: http://www.theaustralian.com.au/news/nation/governments-broadband-not-up-to-speed-at-tasmanian-school/story-e6frg6nf-1225961150410
Now, you may well read the statements by 'Internode spokespeople' differently to the way I do. However when a company says it is increasing connectivity by 400% it only means one thing to me - the bandwidth up to the time of upgrade was woefully inadequate. Similarly when a provider ascribes slow user speeds to "problems with Bass Strait back haul" it only means they don't have enough ( as the forced subsequent retraction of those statements clearly indicated). No problem - these things can happen for all sorts of reasons but, in both these cases, they can't blame this situation on 'up stream' providers as both suppliers (and we know this as we use both suppliers referenced) can upgrade these circuits in 48 hours. Again, these things can happen to any provider at any time (including Telstra) but Internode has always made a song and dance about its past provisioning policies that it appears very odd to have moved away from their stated "massively over provisioned, golden network" to a point where under provisioning appears apparent in at least two key services. The issue isn't that it happened and was addressed but that it happened at all. Only one reason springs to mind - less money is available these days at Internode to provision links as they did in the past.....most likely reason for that is.....form your own views....but it appears to have caused a significant change in company policy. That is just one example of my inability to understand what is happening around us and I only use it because of the third party references rather than quoting statements made by people I talk with. It's a strange time in my, longer than most, time in the communications industry I have never been so 'lost' as to what is likely to happen 'next'. This is not a good way to be when your principal activities over the coming days are to revise a business plan. PS: Not wishing to say "I told you so" but those of you that read these musings regularly might remember that I have been saying since June that for all Labor's tub thumping about how good the economy is - I said that I, and the business people I talk with, saw it very differently: http://www.smh.com.au/business/economy-moves-into-the-slow-lane-20101201-18gn7.html Copyright © Exetel Pty Ltd 2010
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